In the early hours of Friday a vote to leave the European Union caused the pound to fall as much as 10.2 percent and spot gold to rise 5.9 percent.
Where can equity investors take shelter from this gathering storm? Well, George Soros and Kyle Bass will be disappointed to learn that China would have been their best bet.
While by noon in Hong Kong most markets that were trading showed losses ranging from 3 percent to 6 percent on Brexit, the Shanghai-Shenzhen CSI 300 was down about 1 percent, outperforming everything else that is considered a risky asset.
That shouldn't be a surprise. Unless a foreign fund has a qualified institutional investor quota from the China Securities Regulatory Commission, it can't trade the stocks in the Shanghai-Shenzhen index. Which means skittish portfolio managers can't freely pull out.
The Chinese blue-chip index, however, does run on its own agenda. A regression of weekly returns over the past 10 years for the 13 largest stock indexes in the world by market cap, plus Singapore's Straits Times Index, shows that the CSI 300 is the least correlated with the U.K.'s FTSE 100.
Similarly, the Chinese yuan is the steadiest currency in Asia today, if the yen is excluded. (The Japanese currency is seen as a haven and is rallying strongly.)
So the next time a major market dislocation seems imminent, don't listen to the China bears: The safest place to hide might be Shanghai.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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